Northamptonshire County Council firm spent £1.5m on unspecified 'projects'

The nature of the "projects" listed on the council-owned company's accounts is not known

A company owned by a cash-strapped council spent £1.5m on unspecified "projects," without external checks.

Northamptonshire County Council has commissioned an independent investigation into NEA Properties.

A former NEA director said the projects related to the promotion of tourism and supporting the county's economy.

It also emerged council leader Matt Golby attended a hospitality box at Northampton Saints Rugby Club, purchased by the company.

Government-appointed commissioners were brought in earlier this year to oversee the authority, which has twice banned new spending, and is due to be scrapped and replaced in 2020.

It currently has a budget deficit of £65m.

Analysis of NEA's accounts shows its spending increased sharply the year after Conservative councillor Andre Gonzalez De Savage became a director in 2008.

A line appears on subsequent balance sheets, titled "projects," which totalled £1.55m between 2008 and 2018, when the company was wound up - but the nature of these "projects" is not specified.

An audit investigation was told the money was spent on a new stand at Northampton Saints, a claim the club deny

KPMG, which is reviewing the council's accounts, recently reported that NEA Properties' accounts had not been independently checked since 1995.

A 2017 audit report, commissioned following a whistle-blowing referral, details an £80,000 "grant" to Northampton Saints towards the construction of its Barwell Stand.

But KPMG obtained a letter from the club stating the money actually purchased marketing and hospitality, including the use of a 16-person corporate box for two years.

Mr Gonzalez De Savage said: "In terms of finances and the reporting of them, Northamptonshire County Council legal and finance departments were the appointed responsible areas and the manner in which they reported and presented the documents was, in their professional opinions, correct.

"The promotion of countywide tourism, sport, heritage and supporting the county's business economy was very much at the heart of all the projects that NEA contributed to."

• The story behind the cash-crisis council

Conservative council leader Mr Golby told the Local Democracy Reporting Service (LDRS): "I went from time to time. I thought it was part of Northamptonshire Enterprise Partnerships and did not know it was being funded by the county council".

Conservative councillor Bill Parker, who was also a director of NEA Properties, told the LDRS he thought the box had been paid for by NEA on behalf of Northamptonshire Enterprise Partnerships (NEP), the agency working to promote the county.

He said: "It was so we could tell them [potential investors] what the county council was about and what NEP was about".

Both Mr Golby and Mr Gonzalez De Savage said staff from KierWsp, the county's highways contractors, also attended the box. A spokesman for the company said the matter was under investigation.

In August, the authority backed "radical" cuts to services to tackle its funding shortfall

NEA's single biggest expenditure under "projects" was £719,000 in 2014-15, which may be related to the £700,000 NEA is said to have paid back to the county council that year following a property sale.

But the accounts show £235,000 was subtracted from the £820,000 sale proceeds, entitled "net carrying amount," and it is unclear what that represented.

At an audit committee meeting on 13 September, the council's monitoring officer Susan Zeiss said the external investigation should be finished within a month or two and more information was coming in "on a daily basis".

The inquiry, conducted by a monitoring officer from another council, is looking at NEA Properties' governance arrangements, but it is understood they will not be going through the company's books.

KPMG has said NEA may have misapplied the small companies exemption which meant that it avoided external scrutiny.